DEBT OR EQUITY? Pespective Cooperation on Shipping Sector

Abstract

This study discusses corporate finance in order to enlarge the company's capacity.
There are two ways to finance this, namely by issuing debt securities and by selling some
shares to other parties or to the general public. Data is taken from 24 shipping companies
that provide transportation services listed on the Indonesia Stock Exchange through RTI
Business in the form of liabilities, equity, DER, ROA and ROE. To analyze the data used
descriptive analysis and correlation analysis techniques. Although the correlation
between DER and ROA gives positive results, it does not provide information on which
stocks are suitable for investors to choose in investing. When viewed from the value of
ROE, investors can choose companies that have ROE above 15% and a positive DER
value. In the research there are two shipping companies that have ROE above 15%,
namely HITS and TCPI. In choosing a source of corporate funding, management must be
careful. Debt that is too large compared to the ability to pay together with the interest is
very burdensome for the company. This can reduce the value of assets and inhibit the
increase in company equity.
If a company has very stable cash flow, it can use more debt than companies in
risky industries or very small companies that are just starting to operate. New businesses
with high uncertainties may have difficulty obtaining debt financing and better finance
their operations mostly through equity.

Keyword: debt, equity, DER, ROA, ROE.